NEW MEDIA: Spotlight On - leads the way with completely integrated thinking. uses its existing data on customers to best effect, Alasdair Reid writes

Arguably, the most obvious reason for the success of is that it actually works. You go on to the site, you choose the items you want, you give your credit card details and some time later the Tesco people turn up at your door with those little green crates filled with bulging carrier bags.

It's all rather confusing at first and you're likely to spend hours trying to work out what they've got wrong. With most online shops this is blindingly obvious - they'll send you the wrong item or they'll wait three weeks before sending you a garbled message to the effect that they can't actually send you the thing you ordered but would you perhaps consider receiving the standard default order number three instead?

Tesco tends to deliver. That's not exactly unique - a handful of others, such as Amazon, are up there too - but it's certainly pretty rare. And the thing is, it pays. Results released last week show that is now taking revenues of around £1 million a day and is trading profitably.

Just how does it get it so right? The simplest answer is: logistics.

And the success of is proof positive (if any more proof were needed) that the original dotcom model pursued by would-be e-tailers was horribly wrong - and that the clicks and mortar worldview can be very right.

The original theory was that to sell online you had to chuck out all you already knew and start again. You had to have a new brand, for a start, and then you had to do away with the distribution structures that had worked so well for you in the past and the corporate video was going to look a bit like it was directed by Terry Gilliam in the style of Brazil.

Retail analysts laughed when Tesco said it was going to fulfil online orders by having personal shoppers pushing trolleys round local bricks and mortar stores. So it has confounded sceptics by creating a model that actually works. But arguably that's only half the battle and the real success has been the advertising and other marketing activity supporting the service.

This began, you might think, from a slightly unpromising position. The face of Tesco, after all, has been more than a little conservative in recent years. In the "Mother of all shoppers

character played by Prunella Scales, it has been flirting rather dangerously with the award for the most irritating caricature since Maureen Lipman doled out her chicken soup for British Telecom.

But actually, that probably worked in Tesco's favour because the Lowe's advertising allowed it to present online shopping as something anyone can do, rather than a dreadfully scary rollercoaster ridden only by early adopters. And the execution fitted seamlessly into the overall Tesco campaign - remember the one where Prunella is laid up in bed and her daughter thinks she's doing her a favour by getting some things in for her, only to find that the Tesco delivery people have beaten her to it?

The brand advertising was only the start, however - and perhaps the greatest lesson to be learned from this success story is the virtue of total integration, above and below-the-line, on- and offline. And in this respect, Tesco had a superb ace up its sleeve - it now owns Dunnhumby, the database management company that manages its club card and loyalty card schemes.

So it has been able to do whizzier things with that data than most companies.

And that, in turn, has been the cornerstone of its below-the-line activities.

Loyalty scheme data can be analysed to show which households are likely to be interested in buying online. Some, for instance, will be extremely resistant to the idea that they should pay an extra £5 or so just to have their groceries delivered. For others, who find shopping a real chore, it will seem like a very good deal indeed.

The activity is co-ordinated by EHS Brann. The agency's chairman, Terry Hunt, explains: "It's a fully integrated on- and offline campaign. There are bursts of branding activity and direct mail is used to generate trial.

Once the customer has shown an interest and made a purchase, the best way to keep interest is through e-mail. With all online trading there is a danger of it being recessive - people using it a few times and then forgetting all about it. E-mail is the engine that keeps the whole thing chugging."

And it's actually one of the most sophisticated (and researched) e-mail campaigns ever. E-mail activity isn't exactly tailored to every individual customer but the message can be customised according to different customer behaviour profiles and the agenda of each local store. And it's all integrated completely into the functioning of each store - not a bolt-on.

So, is this the future? Are other retailers likely to learn from what they see at Tesco? Retailers are not all the same, Simon Marshall, the managing director of Publicis Dialog - which works for Asda, says, but he admits that no-one can ignore what Tesco has achieved.

Marshall states: "I think everyone in our business respects what has done as an extension of the success of the whole company. You have to be impressed with the way it has taken its loyalty schemes and extended them into other areas - for instance, financial services as well as online.

"It shows the benefits of integrated thinking and also consumer-centric thinking. I think it reached a decision somewhere along the way and realised that its business was not about filling shelves, it was about meeting consumers' needs - to me, it's indicative of a long-term strategy. And I think right across the industry. Tesco is one of the places you expect to see innovations coming from."


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